Daily Investment Strategy

Daily focus：Tencent（700）

Recently, the market has started to focus on AI development in China. As early as September last year, Tencent announced the launch of its next-generation large model "Hunyuan Turbo," which significantly improves performance compared to its predecessor, with a 108% increase in training efficiency, a 100% increase in inference efficiency, and a 50% reduction in inference costs. Its performance matches that of GPT-4o across multiple benchmark tests. With the emergence of DeepSeek, the AI investments and LLM advancements of China's internet giants may start to gain market recognition. Additionally, the market is generally optimistic about the prospects of the gaming business and expects strong growth in its advertising business. Tencent has a rich game pipeline with over 80 titles, of which 51 have received NPPA approval. Among the games expected to launch in 2025 is "Honor of Kings: World," an open-world role-playing game based on Tencent's popular MOBA game "Honor of Kings." This game will support multi-platform releases and is expected to launch globally in 2025. Furthermore, a new series of the classic action role-playing game "Monster Hunter," titled "Monster Hunter Outlanders," co-developed by Tencent Games' TiMi Studio Group and Capcom, will be available on Apple Store and Google Play, with pre-registration already open on the official website. Tencent's gaming business is projected to grow by 9% in 2025, with domestic and overseas gaming businesses increasing by 7.7% and 11.2%, respectively. Tencent maintains restraint in its advertising placements on its platforms (such as WeChat Moments). Although it could increase ad slots, Tencent is not rushing to expand due to considerations for user experience. Currently, its advertising inventory is not fully utilized, indicating more monetization potential remains.

Beijing retaliates against Trump tariffs

U.S. President Trump postponed the proposed 25% import tariffs on Canada and Mexico by 30 days, but he did not extend such leniency to Beijing, as his 10% tariffs on goods from China took effect on Tuesday. In response, Beijing retaliated by imposing a 15% tariff on coal and liquefied natural gas imports from the U.S., along with an additional 10% duty on crude oil, agricultural equipment, and automobiles starting February 10. China's commerce ministry also implemented export controls on rare earths and exotic materials, of which China is a leading producer. The materials affected include tungsten, tellurium, ruthenium, and molybdenum. Additionally, Beijing added PVH Corp, the owner of Calvin Klein, and biotechnology firm Illumina to its list of unreliable entities and initiated an antitrust investigation into Alphabet, the parent company of Google. These retaliatory measures indicate the onset of a renewed trade war between the world's largest economies, with investors preparing for further escalation due to Trump's aggressive stance against Beijing. China constitutes a significant portion of U.S. imports, meaning any retaliation from Beijing is likely to further destabilize global trade.